Experts recommend that if you have a lot of assets, you should get enough liability coverage to protect them. Let’s say you have $50,000 of bodily injury liability coverage but $100,000 in personal assets. If you’re at fault in an accident, attorneys for the other party could go after you for the $50,000 in medical bills that aren’t covered by your policy.
The general recommendations for liability limits are $50,000 bodily injury liability for one person injured in an accident, $100,000 for all people injured in an accident and $25,000 property damage liability (usually expressed in insurance shorthand as 50/100/25). Here again, let your financial situation be your guide. If you have no assets that an attorney can seek, don’t buy coverage unnecessarily.
Your driving habits might also be a consideration in determining the coverage you need. If your past is filled with crumpled fenders, if you routinely speed, or if you make a long commute on a treacherous winding road every day, then you should get more complete coverage. Collision coverage pays for damage to your car in an accident or damage from hitting an inanimate object (a tree, lamppost or fence, for example). Comprehensive coverage addresses damage that didn’t occur in a collision — such as from fire, theft or flood. It also covers damaged windshields.
Keep in mind that you don’t have to buy collision and comprehensive coverage. Let’s say your vehicle is older, you have a good driving record, and there is little likelihood that your car would be totaled in an accident. But you have to park in a so-so neighborhood for work, so the car has a risk of being stolen. Then you could buy comprehensive coverage and skip the collision insurance.
